Established in 1974, Singapore Temasek Holdings Pte Ltd is a singaporean state-owned enterprise registered in a private name for asset management and management, headquartered in Singapore.
Temasek is one of the most efficient asset management companies in the world, although it is a Singapore state-owned enterprise, but its state-owned enterprise, market-oriented operation structure model, after more than 20 years of business practice, out of a singaporean characteristics of the state-owned assets business model. Its business characteristics are very distinct and distinctive:
First, the complete market-oriented operation of separating government from enterprises, clear property rights, and financial openness. The government supervises but does not interfere in the business activities of enterprises, reviews major matters but does not promise, and encourages bold business innovation but does not get out of control.
Second, through Temasek, the government has managed state-owned assets to "grasp the big and let go of the small", and has achieved the goal of enhancing the control of the state-owned economy over the national economy.
Third, the government has realized the preservation and appreciation of state-owned assets, expanded the control of the state-owned economy, and cultivated and brought up a number of modern enterprises of international standards through means and measures such as "grasping the leading body, setting targets, setting scope, and looking at efficiency."
Fourth, implement the strategy of equal treatment, emphasize fair competition under equal conditions, and cultivate and cultivate a group of entrepreneurs of international standards.
Temasek's incentive system began with the idea of Singapore's founding Prime Minister Lee Kuan Yew that "people are motivated to work". This is a widely proven theoretical principle, and it is also the basic concept of the corporate incentive system that conforms to human nature.
The establishment of the incentive system must have both incentives and supervision, which is two sides of the same coin. Without the incentive of supervision, it is difficult to solve the problems of employee greed, waste, gray income, etc., and the final result is to cause greater losses to the company.
Driven by this philosophy, Temasek's incentive system has established the most distinctive "bonus and callback" system. Bonus is determined by investment income, and when the company makes money, it is distributed according to the rules agreed in advance; When the company's income is negative, it will not get the bonus.
A bonus incentive is a short- to medium-term cash incentive that is a way to share a company's profits, whether it is an annual bonus or an investment income bonus. Managers and key employees receive short-term cash and wealth appreciation returns, and this incentive ensures that they are paid competitively.
This incentive system is not the real feature of Temasek's incentive system, and its "call back" system is Temasek's unique skill. If the value created by the so-called "callback" manager team in asset management is negative and the reward is negative, it is necessary to lose money to shareholders to bear the responsibility for operating losses.
The key link is how the funds "called back" are circulated? This is Temasek's institutional arrangement of "deferred incentives", which is also the precondition and possibility of establishing a "callback" system.
Temasek has opened a Bonus Reserve Account for every one of its employees. When the bonus is positive, the wealth is distributed to the employee's reserve account. The money in this reserve account cannot be taken away in the same year, it is deferred. Only a portion of them are paid each year, and how much is distributed depends on the level of the employee.
If the balance of the Wealth Appreciation Bonus Reserve is positive, senior management will receive an award of not more than one-third of the balance of its Bonus Reserve Account, a half of the reward for middle management and two-thirds for other employees. That is, the higher the level, the greater the responsibility, and the longer the wealth in this account is delayed by deferred payments.
In this way, there is always a balance in this account. When wealth creation is negative, bonuses can be dialed back from this account. When the deferred incentive is not sufficient to offset the callback funds, the excess callback amount is deferred to the following year.
In our business society, it is common practice for business executives to "lose money and not lose money", but Temasek has effectively created a "negative profit and loss" system under the framework of deferred incentives.
Temasek has established an effective and unique corporate governance structure and has enabled the company to grow healthily and rapidly through its uniquely designed incentive and constraint system.
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